SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For The Quarter Ended March 31, 1999 Commission File Number 0-25025
-------------- -------
SEDONA WORLDWIDE INCORPORATED
(Exact name of registrant as specified in its charter)
ARIZONA 86-0718104
- ------------------------------- ------------------------------------
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
3840 North 16th Street, Phoenix, Arizona 85016
----------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code 602-263-9600
--------------
---------------------------------------------------
Former name, former address, and former fiscal year,
if changed since last report.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
stock, as of the latest practicable date.
Class Outstanding at March 31, 1999
- ------------------------------- -----------------------------
Common Stock, without par value 4,200,000 shares
<PAGE>
PART I
ITEM I. FINANCIAL STATEMENTS
SEDONA WORLDWIDE INCORPORATED
(A MAJORITY-OWNED SUBSIDIARY OF ILX RESORTS INCORPORATED)
BALANCE SHEET
December 31, March 31,
1998 1999
----------- -----------
(Unaudited)
ASSETS
Cash and cash equivalents $ 68,406 $ 14,908
Accounts receivable 786 422
Inventories 134,180 100,880
Prepaid and other 77,022 85,873
----------- -----------
Total current assets 280,394 202,083
Property and equipment, net 42,889 33,873
----------- -----------
TOTAL ASSETS $ 323,283 $ 235,956
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES & CAPITAL DEFICIENCY:
Accounts payable $ 32,163 $ 25,510
Due to parent 2,333,635 2,305,515
Accrued expenses 26,284 22,836
Capital lease - current 26,171 19,158
----------- -----------
Total current liabilities 2,418,253 2,373,019
----------- -----------
Common stock 1,000,000 1,000,000
Deficit (3,094,970) (3,137,063)
----------- -----------
Net capital deficiency (2,094,970) (2,137,063)
----------- -----------
TOTAL LIABILITIES AND CAPITAL $ 323,283 $ 235,956
=========== ===========
See notes to consolidated financial statements
2
<PAGE>
SEDONA WORLDWIDE INCORPORATED
(A MAJORITY-OWNED SUBSIDIARY OF ILX RESORTS INCORPORATED)
STATEMENT OF OPERATIONS
(UNAUDITED)
Three months ended March 31,
----------------------------
1998 1999
---------- ----------
Net Sales:
Customers $ 6,830 $ 34,750
Affiliates 39,831 69,182
---------- ----------
Total net sales 46,661 103,932
---------- ----------
Cost of sales: 34,374 65,349
---------- ----------
Gross profit 12,287 38,583
Sales, General & Administrative Expense: 78,986 80,129
---------- ----------
Loss from operations (66,699) (41,546)
Interest expense 1,364 547
---------- ----------
Net Loss (68,063) (42,093)
========== ==========
Weighted average shares of common stock
outstanding 4,200,000 4,200,000
Basic net loss per share $ (0.02) $ (0.01)
========== ==========
See notes to consolidated financial statements
3
<PAGE>
SEDONA WORLDWIDE INCORPORATED
(A MAJORITY-OWNED SUBSIDIARY OF ILX RESORTS INCORPORATED)
STATEMENT OF CASH FLOWS
(UNAUDITED)
Three months ended March 31,
----------------------------
1998 1999
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(68,063) $(42,093)
Depreciation and amortization 7,445 9,872
Decrease in accounts receivable 72 364
(Increase) decrease in inventory (51,845) 33,300
(Increase) decrease in prepaid and other 2,731 (8,851)
(Increase) decrease in accounts payable 59,596 (6,653)
Decrease in accrued expense (3,260) (3,448)
-------- --------
Net cash used in operating activities (53,324) (17,509)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (1,390) (856)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on debt and leases (9,290) (7,013)
Advances from parent 56,116 (28,120)
-------- --------
Net cash provided by financing activities 46,826 (35,133)
-------- --------
DECREASE IN CASH (7,888) (53,498)
CASH AT BEGINNING OF PERIOD 17,296 68,406
-------- --------
CASH AT END OF PERIOD $ 9,408 $ 14,908
======== ========
See notes to consolidated financial statements
4
<PAGE>
ILX RESORTS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. BUSINESS DESCRIPTION AND BASIS OF PRESENTATION
Sedona Worldwide Incorporated, formerly Red Rock Collection
Incorporated (the "Company"), commenced operations in April 1992, and is
incorporated in the State of Arizona. The Company is an 80 percent-owned
subsidiary of ILX Resorts Incorporated ("ILX").
The Company markets and distributes skin and hair care products through
ILX resorts located in Arizona, Colorado and Indiana and on a limited basis
through sales primarily in the southwestern United States.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10-QSB and Rule 10-01 of
Registration S-X. Accordingly, they do not include all of the information and
notes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments and
reclassifications considered necessary for a fair and comparable presentation
have been included and are of a normal recurring nature. Operating results for
the three-month period ended March 31, 1999 are not necessarily indicative of
the results that may be expected for the year ending December 31, 1999. The
accompanying financial statements should be read in conjunction with the
Company's most recent audited financial statements.
The accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. As shown in the financial
statements, during the three months ended March 31, 1998 and 1999, the Company
incurred net losses of $68,063 and $42,093, respectively, and, as of December
31, 1998 and March 31, 1999, the Company's current liabilities exceeded its
current assets by $2,137,859 and $2,170,936 respectively, and its total
liabilities exceeded its total assets by $2,094,970 and $2,137,063,
respectively.
The Company's continuation as a going concern is dependent upon its
ability to generate sufficient cash flow to meet its obligations on a timely
basis, to obtain financing as may be required, and ultimately to attain
profitable operations. ILX has funded the Company's cash shortfalls since
inception. The Company filed a Form 10-SB Registration on November 4, 1998,
which became effective by lapse of time on January 3, 1999. ILX intends to make
a distribution of all of the shares of the Company's common stock which ILX
holds to the ILX shareholders on a pro rata basis ("the Spin-Off"). The Company
is attempting to obtain a credit facility to address its cash flow needs.
STOCK SPLIT
On August 24, 1998, the Company's shareholders approved an amendment to
the Company's Articles of Incorporation to effect a six-for-one stock split of
the Company's issued and outstanding shares of common stock. The stock split has
been retroactively reflected in the accompanying financial statements.
INVENTORIES
Inventories are recorded at the lower of cost (first-in, first-out) or
market.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is computed
using the straight-line method over the estimated useful lives of the assets,
which range from three to five years. Property and equipment under capitalized
leases are stated at the lesser of fair value or the present value of future
minimum lease payments at the date placed in service, and amortized on the
straight-line method over the term of the lease.
5
<PAGE>
ILX RESORTS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
INCOME TAXES
Income taxes are accounted for using Statement of Financial Accounting
Standards ("SFAS") No. 109, "Accounting For Income Taxes." Under SFAS No. 109,
deferred tax assets and liabilities are recognized for the estimated future tax
effects attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax basis. The
Company provides for taxes as if the Company had operated on a stand-alone
basis.
REVENUE RECOGNITION
The Company recognizes sales of products when the products are shipped.
Revenue from consigned goods is recognized when sold and is not considered
significant to the operations of the Company.
ACCOUNTING MATTERS
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income," which is effective for financial statements for periods beginning after
December 15, 1997 and establishes standards for reporting and display of
comprehensive income and its components (revenues, expenses, gains and losses)
in a full set of general purpose financial statements. During 1998, SFAS No. 130
was adopted and had no material impact on the Company's financial statement
presentation or related disclosures.
In June 1997, the FASB issued SFAS No. 131, "Disclosure About Segments
of an Enterprise and Related Information," which is effective for fiscal years
beginning after December 15, 1997 and establishes standards for the way that
public business enterprises report information about operating segments in
annual financial reports issued to shareholders. It also establishes standards
for related disclosures about products and services, geographic areas, and major
customers. The Company has a single segment in the personal care products
industry. Revenue from the Company's only major customer is reported on the
income statement under Affiliates.
NOTE 2. BUSINESS CONDITION
As shown in the accompanying financial statements, the Company incurred
a net loss of $42,093 during the three months ended March 31, 1999, and as of
that date, the Company's current liabilities exceeded its current assets by
$2,170,936 and its total liabilities exceeded its total assets by $2,137,063.
Those factors create an uncertainty about the Company's ability to continue as a
going concern. The financial statements do not include any adjustments that
might be necessary if the Company is unable to continue as a going concern.
In conjunction with the Spin-Off, the Company believes ILX will forgive
the intercompany indebtedness from the Company to ILX of $2,305,515 at March 31,
1999. The Company has incurred net losses since its inception. In order to
achieve profitability it will be necessary for the Company to substantially
increase its revenue. While there are presently some opportunities in progress
that may generate sufficient additional sales to generate profits, there can be
no assurance that such revenues will be generated from current sources. Post
Spin-Off, the Company may pursue debt or equity financing that will enable it to
invest in marketing and distribution geared toward generating greater revenues.
However, there can be no assurance that such financing will be available or that
the marketing and distribution efforts will be successful in generating
sufficient sales to achieve profitability.
6
<PAGE>
ITEM II. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION OF THE COMPANY'S FINANCIAL CONDITION AND
RESULTS OF OPERATIONS INCLUDES CERTAIN FORWARD-LOOKING STATEMENTS. WHEN USED IN
THIS FORM 10-QSB, THE WORDS "ESTIMATE," "PROJECTION," "INTEND," "ANTICIPATES"
AND SIMILAR TERMS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS THAT
RELATE TO THE COMPANY'S FUTURE PERFORMANCE. SUCH STATEMENTS ARE SUBJECT TO
SUBSTANTIAL UNCERTAINTY. READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON
THE FORWARD-LOOKING STATEMENTS SET FORTH BELOW. THE COMPANY UNDERTAKES NO
OBLIGATION TO PUBLICLY UPDATE OR REVISE ANY OF THE FORWARD-LOOKING STATEMENTS
CONTAINED HEREIN.
OVERVIEW
Sedona Worldwide Incorporated was formed in 1992 to develop, test,
market and distribute its own proprietary "Sedona Spa" branded lines of face,
hair and body care products and apparels containing ingredients or materials
indigenous to, and embodying the appeal of, the Southwestern region of the
United States and of Sedona, Arizona in particular. To date, the Company has
generated revenue primarily through the sale of its face, hair and body care
products to ILX, of which it is an 80% subsidiary. ILX distributes the Company's
products as in-room amenities at its resorts and hotels, as premiums
(incentives) to its customers for attending vacation ownership sales
presentations, and for retail sales at its resort gift shops, and at the Sedona
Spa at Los Abrigados Resort & Spa. The Company also generates revenue from
direct mail sales to consumers (many of whom were introduced to the products as
in-room amenities or premiums) and from limited retail distribution in specialty
shops.
RESULTS OF OPERATIONS
The following table sets forth certain operating information for the
Company:
THREE MONTHS ENDED MARCH 31,
----------------------------
1998 1999
---- ----
Net sales:
Sales to affiliates (1) 85.4% 66.6%
Sales to non-affiliates 14.6% 33.4%
----- -----
Total sales 100.0% 100.0%
===== =====
As a percentage of net sales:
Cost of sales 73.7% 62.9%
Contribution margin 26.3% 37.1%
Sales, general and administrative expense 169.3% 77.1%
Net Loss 145.9% 40.5%
- ----------
(1) Sales to affiliates consist of sales made to ILX. Sales to ILX are made at
lower prices (generally cost plus a small mark up) than sales to
non-affiliates.
COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 1998 TO THE THREE MONTHS
ENDED MARCH 31, 1999
Net sales increased 122% or $57,271 in 1999 to $103,932 from $46,661 in
1998 reflecting the emphasis on additional channels of distribution and changes
in the ILX resorts' use of products as amenities and premiums. Cost of sales as
a percentage of sales for 1999 of 62.9% is lower than 1998 of 73.7% because of a
lower percentage of sales to ILX resorts, which have a lower profit margin.
Sales, general and administrative expenses were comparable between
periods.
Interest expense decreased from $1,364 in 1998 to $547 in 1999
reflecting declining capital lease obligations.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(CONTINUED)
There is no income tax benefit recorded in 1998 or 1999 because the
Company has recorded a valuation allowance equal to its deferred tax asset at
December 31, 1998 and March 31, 1999, respectively. Under SFAS No. 109, deferred
tax assets and liabilities are recognized for the estimated future tax effects
attributable to differences between the amounts of the Company's existing assets
and liabilities and their respective tax basis. Because the Company has not yet
generated taxable income, and therefore sufficient evidence does not exist that
differences in financial and taxable income and net operating loss carryforwards
will be utilized to reduce future income taxes, no income tax benefit has been
recorded for the three-month period ended March 31, 1999.
LIQUIDITY AND CAPITAL RESOURCES
SOURCES OF CASH
The Company generates cash primarily from the sale of its own
proprietary "Sedona Spa" branded lines of face, hair and body care products and
apparels containing ingredients or materials indigenous to, and embodying the
appeal of, the Southwestern region of the United States and of Sedona, Arizona
in particular. During the three-month periods ended March 31, 1998 and 1999,
cash used in operations was $53,324 and $17,509, respectively. Historically the
Company's cash flows from product sales have not been sufficient to fund its
operations, and shortfalls have been funded by its majority parent, ILX. ILX
advanced the Company $56,116 in the three months ended March 31, 1998 and the
Company returned $28,120 in the three months ended March 31, 1999. ILX has
funded the Company's cash shortfalls since inception and will continue to do so
until the completion of the Spin-Off. As of March 31, 1999, the Company was
indebted to ILX in an amount in excess of $2,305,000, which is expected to be
forgiven in conjunction with the Spin-Off. Following the Spin-Off there can be
no assurances that ILX will fund the Company's cash needs. Without such a
commitment, or other sources of working capital financing which at present do
not exist, the Company's current cash flows will be insufficient to meet its
liquidity, operating and capital requirements. The Company currently has no
credit facility with a bank or other financial institution. The Company will
attempt to obtain a credit facility to address its cash flow needs; however,
there can be no assurance that any such financing will be available if needed,
or, if available will be on terms acceptable to the Company.
The Company anticipates that its expenses will increase in the future
as it attempts to expand its business by acquiring new products and increasing
sales and marketing efforts and other operations. The Company expects to
continue to incur losses until such time, if ever, as it is able to sell a
sufficient volume of products at prices that provide adequate gross profit to
cover operating costs. The Company's working capital requirements will depend
upon numerous factors, including payment cycles for its shipped products, credit
arrangements with suppliers, the scale-up of its sales and marketing resources,
acquisition of new products and the terms upon which such products are acquired,
competitive factors, and marketing activities. There can be no assurance when,
if ever, the Company will be able to generate sufficient revenues from its
operations to offset its expenses or to secure additional capital commitments.
IF THE COMPANY IS UNABLE TO GENERATE MORE CASH FLOWS THAN IT DOES CURRENTLY, IT
WILL BE INSOLVENT AND MAY HAVE TO DISCONTINUE ITS BUSINESS OPERATIONS.
The Company has historically filed its income tax returns as a member
of the ILX consolidated income tax return. There is no formal income tax sharing
agreement to allocate income taxes among the members of the group and,
historically, the Company has not recorded an income tax benefit for losses it
has incurred that were utilized or may be utilized by ILX.
At December 31, 1998, the Company had approximately $1,117,000 of
federal and state net operating loss ("NOL") carryforwards which will begin to
expire in 2011 for federal income tax purposes and 2001 for state income tax
purposes. Section 382 of the Internal Revenue Code imposes limitations on the
utilization of NOLs by a corporation following various types of ownership
changes which result in more than a 50% change in ownership of a corporation
within a three-year period. Such a change is expected to result from the
Spin-Off of the Company's Common Stock. As a result, following the Spin-Off, the
limitations of Section 382 are expected to apply and may limit or deny the
future utilization of the NOL by the Company.
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(CONTINUED)
USES OF CASH
Investing activities typically reflect a net use of cash for equipment
purchases. Net cash used in investing activities in the three months ended March
31, 1998 and 1999 was $1,390 and $857, respectively.
CREDIT FACILITIES AND CAPITAL
The Company has never accessed commercial financing and to date, all of
its working capital needs have been financed by ILX. However, following the
Spin-Off, ILX does not intend to fund the Company's future cash shortfalls. As a
result, the Company will need to secure alternative financing sources if it
continues to operate at a loss or, even if profitable, it pursues a growth
strategy. There can be no assurance that such resources will be available to the
Company when needed and on favorable terms. In addition, any commercial
financing obtained is likely to impose certain financial and other restrictive
covenants upon the Company and result in increased interest expense. Further,
any issuance of additional equity or debt securities by the Company to raise
additional capital or in connection with any future business combination could
result in further dilution to the Company's' stockholders, including those who
receive shares as a result of the Spin-Off. Although the Company anticipates the
need for additional financing, it does not presently have any plans to engage in
an equity or debt financing transaction.
SEASONALITY
Presently the Company's revenues are only minimally seasonal, with
slightly increased sales during the second and third quarters and December,
reflecting seasonality in resort guests of its major customer, ILX. If the
Company is able to expand its customer base and marketing and distribution
methods, it may experience different seasonality dynamics that may cause
operating results to fluctuate.
CONCENTRATION
The substantial majority of the Company's revenues to date have been
generated from its parent company, ILX. There are no long-term commitments to
purchase by ILX and, in the event ILX ceased to be a customer of the Company,
revenues would be significantly impacted. If ILX remains a customer, revenues
are expected to increase as ILX adds more resorts (which utilize in-room
amenities) and sales offices (which offer premiums to touring guests), although
there can be no assurances in this regard.
YEAR 2000 ISSUES
The inability of computers, software and other equipment utilizing
microprocessors to recognize and properly process data fields containing a
2-digit calendar year is commonly referred to as the "Year 2000 Compliance"
issue. As the calendar year 2000 approaches, such systems may be unable to
accurately process certain date-based information, resulting in program
malfunctions and interruptions.
The Company has identified all significant in-house applications that
will require modifications or upgrades to ensure Year 2000 Compliance. Internal
and external resources are being used to make the required modifications and
upgrades and to test Year 2000 Compliance. The modification and upgrade of all
significant applications is currently in process and the Company expects to have
such modifications complete by September 30, 1999. In addition, the Company will
seek to ensure that applications that it purchases in the future will not have
any Year 2000 issues.
Furthermore, the Company has communicated with others with whom it does
significant business to determine their Year 2000 Compliance readiness and the
extent to which the Company is vulnerable to any third party Year 2000
Compliance issues. The Company expects to have completed these determinations by
the end of the third fiscal quarter of 1999. However, there can be no guarantee
that the systems of other companies on which the Company's systems rely will be
timely converted, or that a failure to convert by another company, or a
conversion that is incompatible with the Company's systems, would not have a
material adverse effect on the Company's business or financial condition.
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(CONTINUED)
The total cost to the Company of these Year 2000 Compliance activities
has not been and is not anticipated to be material to its financial position or
results of operations in any given year. Since the Company commenced its
assessment of its Year 2000 Compliance during early 1998, it has expended
approximately $17,000, consisting primarily of software purchases and associated
training and consultation services. In addition, certain employees of the
Company and ILX have devoted a portion of their time to assessing and
implementing the Company's Year 2000 Compliance, the costs of which have not
been separately allocated by the Company. The Company anticipates that its
additional expenses to be incurred in the future related to Year 2000 Compliance
will not exceed $20,000. These costs and the date on which the Company plans to
complete the Year 2000 Compliance modifications, upgrades and testing processes
are based on management's best estimates, which were derived utilizing numerous
assumptions of future events including the continued availability of certain
resources and other factors. However, there can be no guarantee that these
estimates will be achieved and actual results could differ from those plans.
The Company has not developed a contingency plan in the event that any
of its systems or the systems of any third party with which it has a material
relationship are not Year 2000 compliant. However, it intends to develop such a
plan by September 30, 1999. In the event that the Company is vulnerable to any
such Year 2000 Compliance issue, the worst case scenario could include an
inability to process orders or properly bill and collect its accounts receivable
and it could be forced to suspend its operations and/or become unable to collect
certain accounts owed to it.
INFLATION
Inflation and changing prices have not had a material impact on the
Company's revenues, loss from operations or net loss for the three months ended
March 31, 1998 or 1999.
10
<PAGE>
PART II
ITEM I. LEGAL PROCEEDINGS
The Company is not currently the subject of any pending or, to its
knowledge, threatened legal claims.
ITEM II. CHANGES IN SECURITIES AND USE OF PROCEEDS
None
ITEM III. DEFAULTS UPON SENIOR SECURITIES
None
ITEM IV. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM V. OTHER INFORMATION
None
ITEM VI. EXHIBITS AND REPORTS ON FORM 8-K
(i) Exhibits
Exhibit No. Description
----------- -----------
27 Financial Data Schedule (filed herewith)
(ii) Reports on Form 8-K
The Company filed a report on Form 8-K on March 2, 1999, which
reported the engagement on February 25, 1999 of Hansen, Barnett &
Maxwell, a professional corporation ("HB&M"), as its principal
accountant to audit the Company's financial statements for the
year ended December 31, 1998. Prior to its engagement, the
Company had not consulted HB&M with respect to the application of
accounting principles to a specified transaction or any matter
that was the subject of a disagreement or a reportable event (as
described in Item 301(a)(1)(v) of Regulation S-K).
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused its quarterly report on Form 10-Q to be
signed on its behalf by the undersigned thereunto duly authorized.
SEDONA WORLDWIDE INCORPORATED
(Registrant)
/s/ Patrick J. McGroder III
---------------------------------
Patrick J. McGroder III
Chairman of the Board
/s/ Mia A. Martori
---------------------------------
Mia A. Martori
Director, President and Treasurer
/s/ Stephen W. Morgan
---------------------------------
Stephen W. Morgan
Chief Financial Officer of
ILX Resorts Incorporated
(acting principal financial
and accounting officer)
Date: As of May 14, 1999
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANTS FIRST QUARTER 1999 BALANCE SHEET AND STATEMENT OF OPERATIONS FOR THE
THREE MONTHS ENDED MARCH 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 14,908
<SECURITIES> 0
<RECEIVABLES> 422
<ALLOWANCES> 0
<INVENTORY> 100,880
<CURRENT-ASSETS> 202,083
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 235,956
<CURRENT-LIABILITIES> 2,373,019
<BONDS> 0
0
0
<COMMON> 1,000,000
<OTHER-SE> (3,137,063)
<TOTAL-LIABILITY-AND-EQUITY> 235,956
<SALES> 103,932
<TOTAL-REVENUES> 103,932
<CGS> 65,349
<TOTAL-COSTS> 80,129
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 547
<INCOME-PRETAX> (42,093)
<INCOME-TAX> 0
<INCOME-CONTINUING> (42,093)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (42,093)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
